The fine art of insurance

A list of the world's most prolific art collectors reveals superyacht owners, unsurprsingly, to be at the very top. If their pieces find their way on board superyachts, however, there are fundamental principles to follow in considering insurance.

‘Sakura’ by Rosanjin: one of two wall compositions discovered on an ancient tanker. Image: Bonhams

Superyacht owners are often also the world’s most prolific and serious
art collectors, making the subject of insuring important artworks for
presentation on board an important one. The Superyacht Owner looks into
what needs to be considered and discovers that the intricate policies
also boil down to some fundamental, commonsense principles.

This winter, two Japanese masterpieces once commissioned for the dining room of a Panamanian-owned vessel will go on sale for an estimated GBP 1 million. The works by Kitaoji Rosanjin were discovered on a rusting Japanese tanker as she was about to be broken apart and one look at ARTnews’ world’s top 200 art collectors says that art might yet end up at sea once again. Featuring owners Arnauld, Allen and Abramovich amongst many others, ARTnews’ list shows that owners of yachts are among the globe’s most avid collectors of art. And why wouldn’t they be? For many, hosting an art collection on board a yacht makes sense as the ultimate combination of two luxurious worlds. But there are practical considerations that come with this, such as security, hosting and transporting the art, which all leads to one thing - insurance.

Is there a limit to the sorts of work owners can take on board? The question arises because the sheer value of the artwork purchased is rising. “We are seeing an increase very recently in requests for art finance, and we’re acting on behalf of the parties to facilitate that,” says Elliot Bishop, Solicitor at Hill Dickinson, who works closely with insurance companies to advise owners on their insurance policies.

As the world’s UHNWI have the capacity and backing to purchase more illustrious works of art, it might be wondered if these works could or even should be insured to be taken on board. Could Edvard Munch’s The Scream, for example, the most expensive artwork sold at auction, be insured and even be advised to be taken on board a superyacht? “You could insure it yes, you probably wouldn’t be doing it under the yacht policy, it would be under a separate fine arts policy,” Burr Taylor at Sturge Taylor & Associates insurers informs us.

For less valuable art works, however, a yacht owner could insure the whole collection, which simplifies the process. Sturge Taylor for example, has a yacht policy which insures up to 30 works of art at around a quarter of million each apiece. “As a general rule if items are of significant value we tend to encourage owners to take out a fine arts policy for individual works,” says Taylor.

Edvard Munch's The Scream could feasibly be taken on board under the right policy

There are a multitude of eventualities that need to be factored into any art insurance policy, but on board a yacht, there are unique risks. “There is specific insurance that is widely known to cover the position when art is in transit,” says Bishop. “Owners move their yacht around and will transfer art to their yacht [from various homes globally] and with that comes the risk of transport and insurance is required.” Fine art also needs to be kept in certain conditions to maintain value and avoid damage, and when taking out an insurance policy it is important to consider where you're going to store it. Some policies might specify that artworks damaged over time fall outside of their remit, so the levels of sunlight the art is exposed to onboard should be considered. Art also needs to be kept cool and this is where keeping a working air conditioning system out at sea where a malfunction may be less easily remedied than on land needs to be considered in the policy. Bishop himself has advised on cases where air conditioning has failed on board and the art has deteriorated. “We’ve advised on that as to where claim lies both in terms of insurance and against the manufacturers [of the air conditioning unit] if that be the case," he explains.

Moving and storing artwork is one thing, but there are even further risks to consider in insurance specific to life on a superyacht. In 1999 a Picasso worth GBP 4 million mysteriously disappeared off a yacht while under refit. Taylor notes that in this case – a highly unusual event in itself considering the artwork was under lock and key when she was taken - the owner was able to claim. It is thankfully a rare instance, but not the only one that relates to refit. “I understand there was another painting taken off while work was being carried out for the winter, and it was left to one side and someone ended up stepping on it. I’m not sure how they fixed that [painting] up,” he recalls. Bishop assures us that cases like this are also rare, as are cases of ordinary disputes on claims. “There are not that many incidences of problems relatively speaking, if looking at the risk ratio the risk is quite small, certainly from what we’ve seen,” he says.

The soaring value of art purchased in recent years coupled with the proliferation of owners who also invest in art, is likely to mean more delicate and complex policies need to be taken out. But, as far as deciding to present art on a superyacht goes, there is nothing that should prevent the owner keen to do so and the relatively low level of disputes on claims should also reassure. “[Keeping art on board] is only madness if you don’t have the right insurance policy to go with it – that might be simply that it’s kept in right area under right conditions,” concludes Bishop.

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